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U.S. sues KBR for defrauding its army in Iraq

By David Ingram

(Reuters) - The U.S. government on Thursday accused defense contractor KBR Inc of defrauding its military in Iraq by giving inflated deals to two Kuwait-based subcontractors who in turn paid kickbacks of as much as $1 million to KBR employees.

It was not clear how much the companies could be required to pay if the government were to prevail. The suit did not seek a specific amount in damages.

In a statement, the Justice Department said it had filed the lawsuit in U.S. District Court for the Central District of Illinois against Houston-based KBR and subcontractors La Nouvelle General Trading & Contracting Co and First Kuwaiti Trading Co.

KBR was a key government contractor for the U.S. Army after the 2003 invasion of Iraq, providing transportation, maintenance, food, shelter and facilities management. KBR did not immediately respond to requests for comment on the suit.

The Justice Department alleged that KBR took kickbacks from subcontractors La Nouvelle and First Kuwaiti and then sought inflated or undue reimbursement from the U.S. government for goods and services.

A statement from the department said La Nouvelle arranged with KBR to supply fuel tankers at triple their value and then gave a $1 million bank draft to the KBR employee who awarded the subcontract. KBR also allegedly continued paying leases on trucks that had been returned to First Kuwaiti and then filed for reimbursement for the unnecessary payments.

The suit also alleges that KBR used refrigerated trailers as temporary morgues and then did not sanitize them before using the trailers to haul ice for troops.

The U.S. Attorney's Office in Rock Island has convicted 10 companies and individuals in connection with Iraq War contracts. Three of the individuals are KBR subcontract managers who admitted taking kickbacks or making false statements in connection with the allegations in the government complaint.

(Reporting by David Ingram and Bill Trott; Editing by David Storey)

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